Employee Participation, Digital Sophistication and Innovation Performance

Analysis Based on the Finnish MEADOW Survey

Abstract

The results of the Finnish MEADOW survey of 2021–2022, comprising responses of management from 1,106 companies, show that nearly half of Finnish companies employing ten or more people had produced a new or significantly improved product or service during the last two years. Of these companies, almost half had produced products or services new also to the market. Both the level of digital sophistication and the extent of employee participation in development are positively associated with the company’s innovation performance after all other factors in the multinominal regression analysis are controlled. The odds ratios in the regression models are higher for innovations new to the market than innovations new only for the company. Broad employee participation shows the highest odds ratios of all variables included in the regression models for both types of innovation. As also companies’ cooperation networks and customer involvement can play a role in innovations, we analysed the combined effect of the above four factors on innovation. A clear positive combined effect for both innovations new to the market and new only for the company was detected, suggesting that it is difficult for companies to build innovation superiority based on technological ability alone – or any other single factor – and that broad employee participation in development is an essential part of the portrait of an innovative company also in the digital age.